Old Second begins exchange offer for $31.6 million of 7.8% securities

By Susanna Moon

Chicago, June 22 - Old Second Bancorp, Inc. said it began an offer to exchange a portion of the $31.6 million outstanding liquidation amount of the 7.8% capital securities issued by Old Second Capital Trust I for newly issued common shares.

The exchange offer is the first component of a multi-faceted capital strategy designed to strengthen the company's capital position, according to a press release.

For each $10.00 liquidation amount of securities, Old Second will issue a number of common shares equal to $7.50 divided by the average volume-weighted average price of common shares for the five consecutive trading days ending the second trading day immediately preceding the expiration date of the exchange offer. This represents a 26.1% premium over the last reported sales price of the securities on Nasdaq.

The company also will pay cash for accrued distributions up to the settlement date.

No early tender premium will be paid.

The exchange ratio will be announced prior to 9 a.m. ET on the first trading day following the pricing date of July 29.

The company will issue no more than 6 million shares of its common stock, in the aggregate, in the exchange offer and in a possible separate private exchange of its common stock for capital securities held by some holders of Old Second Capital Trust II. Tendered capital securities will be prorated as needed to remain within the cap.

If stockholder approval is not obtained prior to the expiration of the exchange offer, the cap will be 2.75 million shares of common stock to comply with Nasdaq listing rules.

The exchange offer will expire at 11:59 p.m. ET on Aug. 2.

D.F. King & Co., Inc. (800 628-8536 or 212 269-5550 for bankers and brokers) is the exchange agent.

Old Second is an Aurora, Ill., bank holding company.

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